Tax Planning
How Canada’s New Personal Support Workers Tax Credit Works: A Practical Guide
The Budget 2025 introduces a temporary tax credit for personal support workers. Here's how it works, who qualifies, and how much you might get.
By NomadicTax Research Team • 5-8 min read • November 23, 2025
## What’s the New PSW Tax Credit?
Canada’s Budget 2025 proposes a temporary **Personal Support Workers Tax Credit** running from the **2026 to 2030 tax years**, offering a **refundable credit equal to 5 % of eligible earnings**, up to **$1,100 per year**. This targets PSWs employed in health care establishments where wage support hasn’t already been boosted via bilateral agreements. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/chap3-en.html?utm_source=openai))
## Who’s Eligible (and Who’s Not)
Eligible PSWs must meet all of the following:
- Provide one-on-one, essential care (activities of daily living, patient mobility, safety) under the direction of a regulated health professional or health organization. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
- Work for a **regulated health care establishment**, such as hospitals, residential care, nursing homes, home care, etc. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
- Be located in a province or territory **without** an existing bilateral agreement including wage-boosting funding for PSWs (e.g. BC, NL, NWT have agreements; PSWs in those provinces are excluded) ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## How Much You’ll Get — Examples
| Scenario | Annual Eligible Earnings | Credit Rate (5 %) | Maximum Credit Claimed |
|---|---|---|---|
| PSW earns **$20,000** | $20,000 | 5 % | **$1,000** |
| PSW earns **$25,000** (in eligible province) | $25,000 | 5 % | **$1,100 (cap)** |
| PSW in province with wage-boost agreement | Any earnings | 0 % | **$0** |
Credit is **refundable**, so even PSWs with little or no tax owing can receive money back. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## When It Kicks In & How to Claim
- Applies to **tax years 2026-2030**. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
- Must file a Canadian tax return for each year and report eligible income. Employers will need to certify earnings in prescribed form. ([budget.canada.ca](https://www.budget.canada.ca/2025/report-rapport/tm-mf-en.html?utm_source=openai))
## Actionable Tips for PSWs & Employers
- If you’re a PSW in an eligible province, **track your eligible earnings** from eligible work carefully. Keep supporting documents like employer certifications.
- Employers: become familiar with what constitutes “eligible health care establishment” so that your PSW team can claim correctly.
- If you’re moving provinces, check whether your new jurisdiction had a wage-boost agreement. It may affect eligibility.
- Plan ahead: since credit begins in 2026, think about organizing your records and expected income to maximize benefit.
## Why This Matters
- PSWs often face modest wages despite essential work; this credit directly boosts take-home.
- Helps reduce caregiver shortage by offering financial recognition where support has lagged.
- Encourages federal and provincial governments toAddress long-standing discrepancies in support.
**Bottom line:** If you're a personal support worker in a province without wage-boost funding, expect up to **$1,100/year** back via this credit between **2026–2030**. Keep solid records and tax filing in order to make the most.